A.N.Sen, J. - (1.) A question of law relating to the construction of Section 58K(2) of the Indian Income-tax Act, 1922, arises for consideration in this reference under Section 66(1) of the Indian Income-tax Act, 1922.
(2.) There were 4 scheduled banks, namely, Bengal Central Bank Ltd., Comilla Banking Corporation Ltd., the Comilla Union Bank Ltd. and the Hooghly Bank Ltd. Being scheduled banks, they were directly under the supervision and control of the Reserve Bank of India. There was a proposal for amalgamation of all these four scheduled banks and the proposal was implemented by drawing up a scheme for their amalgamation. Bengal Central Bank Ltd. changed its name to United Bank of India Ltd. and the scheme of amalgamation contemplated that Comilla Banking Corporation Ltd., the Comilla Union Bank Ltd. and the Hooghly Bank Ltd. would amalgamate with the United Bank of India Ltd. The scheme of amalgamation which has been set out at pages 7 to 10 of the paper book, inter alia, provides: (1) The United Bank of India Ltd., formerly the Bengal Central Bank Ltd., shall be the transferee bank and hereinafter referred to as the " transferee ". The registered office of the transferee will, on amalgamation, be at No. 4, Clive Ghat Street, Calcutta. (2) The Comilla Banking Corporation Ltd., the Comilla Union Bank Ltd. and the Hooghly Bank Ltd. shall be the transferor banks and hereinafter referred to as the " transferors ". (3) The banks abovementioned will be amalgamated .... (5) The amalgamation will be on the basis of their respective balance-sheets as on 31st December, 1949, and for the purpose of accounting and for determining profit and loss of the amalgamated bank the transfer will be deemed to take effect as from the 1st day of January, 1950. . . . (15) The properties and assets of the amalgamated banking companies shall, by virtue of the order of sanction, be transferred to and be vested in and the liabilities of the said companies shall, by virtue of the said order, be transferred to and become the liabilities of the transferee company subject to the provisions contained in the scheme. The transferee company shall keep the directors of the transferor companies indemnified against any liabilities, obligations, contracts or agreements. (16) Upon amalgamation the transferee shall be deemed to have appointed all the employees of the transferors as employees of the transferee on the same conditions of service of the respective transferor companies including pay, leave and provident fund on the date of sanction of the scheme of amalgamation subject to such adjustments as may in the discretion of the directors of the transferee company be considered expedient and necessary. In computing the period of service of the said employees whether for the purpose of the Provident Fund Rules or for any other purposes, their period of service with the transferors will be counted .... (18) That the transferor companies, if necessary and whenever called upon by the transferee company, shall assign and transfer all their assets and liabilities and business outside the Indian Union to the transferee company and will do all acts necessary to give effect to the same. The said transfer will, however, take effect and be operative upon the amalgamation taking effect and not otherwise.
(3.) In exercise of the powers conferred upon the Reserve Bank of India under Sub-section (4) of Section 44A of the Banking Companies Act, 1949, the Reserve Bank of India sanctioned the said scheme of amalgamation by an order dated 18th of December, 1950, a copy whereof has been set out at page 6 of the paper book. Although the order of the Reserve Bank was made on the 18th of December, 1950, the amalgamation of the said banks had become effective on and from the 1st of January, 1950.;